Objective: To deliver widespread and tangible benefits to broad sectors of the Palestinian population as quickly, equitably and effectively as possible (to help alleviate the crisis) by (1) removing the most critical infrastructure bottlenecks and improving essential facilities and services; (2) creating productive employment; (3) building capacity and providing institutional support in the area of project and program management. Components: There were two components both of which included numerous tasks and activities: (a) the rehabilitation and improvement of priority infrastructure services in education, wastewater and sanitation, and roads; and (b) institutional support, capacity building and project management. Costs and financing: The total project costs were US$93.5 million (US$128.0 million at appraisal) for which an IDA administered Trust Fund Credit of US$30.0 million was approved in FY94. The Credit was approved in FY94 and closed fully disbursed in December 1998 one year later than planned. The discrepancy between appraisal and actual project costs is because Kuwaiti Fund reduced its contribution from US$10 million to US$2 million and the Arab Fund decided to act bilaterally.

3. Achievement of Relevant Objectives:

The project objectives were achieved. There were no a priori target indicators and the physical and financial composition of the project changed during implementation due to donor preferences. Nonetheless, in infrastructure, over 200 km of roads and streets were rehabilitated; over 400 km of new water lines were built served by three reservoirs and pumping stations; and important sewerage lines were built in Gaza. In education, schools and classroom were built accommodating 30,000 children. Teaching materials were upgraded. For employment, capacity building and institutional support the objectives were also achieved.

4. Significant Outcomes/Impacts:

The significant achievement was the large number of beneficiaries reached: 900,000 with the roads; 700,000 with water and sewerage; and in education both girls and boys now have an equitable access to schools. The development of local engineering profession and contractor capability were another significant project achievement. The first year, during which the construction quality was less and costs greater than planned and desired, was a quick learning experience. Thereafter both the quality and cost were contained demonstrating the substantial pay-off of the strategy of using local consultants and contractors. Finally, the third significant achievement was the substantial employment generation and the development of project management capacity in the implementing agency (Palestinian Economic Council for Development and Reconstruction, PECDAR) from very weak to highly professional.

The only significant shortcoming was the inability to gradually devolve project management from PECDAR to municipalities and the PA Ministries as planned. Although this issue has at least two sides to it, decentralization as an objective is desirable for sustained development.

6. Ratings:

ICR

OED Review

Reason for Disagreement/Comments

Outcome:

Highly Satisfactory

Highly Satisfactory

Institutional Dev.:

Substantial

Substantial

Sustainability:

Likely

Likely

Bank Performance:

Highly Satisfactory

Highly Satisfactory

Borrower Perf.:

Satisfactory

Satisfactory

Quality of ICR:

Satisfactory

7. Lessons of Broad Applicablity:

The project provides several important and interdependent lessons whose generalizability should be investigated. Among the most important ones are the following: (i) the short time span in which local capacity can be developed when given the opportunity and responsibility (and good supervision); (ii) the importance of close on-the-ground supervision for learning, results, and timely completion -- even in difficult circumstances; (iii) 'ownership' and 'capacity' as dynamic developmental concepts that take time, patience, resources, an allowance for initial reduced quality, and good relationships with the mentors (re: the termination of the project's Management Consultant for the lack of responsiveness to the borrower's needs).

8. Audit Recommended? Yes

Why?Several projects are ongoing in West Bank Gaza. An OED CAE is planned for FY00. A thorough evaluation of this and other WBG projects' employment generation and institutional development in highly difficult political and socioeconomic circumstances is desirable for learning purposes because similar projects are likely in other regions. The audit could also provide a learning experience for poverty and gender-related education and water supply projects.

9. Comments on Quality of ICR:

The ICR is satisfactory. However, there should have been a discussion on the future operation of the project, and of the relationship between PECDAR and the PA.